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No rationale or benefits in Greensill pharmacy payments scheme as PAC slams failures on conflicts of interest and delivery

4 February 2022

The Department of Health and Social Care (DHSC) and the NHS took up schemes Lex Greensill advised the government on and promoted through his company – Greensill Capital - from 2018 until the company’s collapse in March 2021, but in its report published today the Public Accounts Committee says “neither scheme delivered what it promised and there was no clear rationale for why they were introduced”.

There was a “considerable lack of curiosity in DHSC about the benefits of the early payment for pharmacies, which in the end did not deliver the promised saving”. The Committee describes it as “extraordinary” that there was “no apparent concern that one company could offer a free salary advance scheme to NHS trusts which could also have the effect of boosting its reputation by association with the NHS brand and scale in order to win business elsewhere.”

The PAC says “there is no evidence of a proper review of potential conflicts of interests arising from Lex Greensill’s various advisory roles between 2011 and 2017, and the commercial activities of Greensill Capital”, and that Departments and the Crown Commercial Service - the agency charged with protecting taxpayer interests in commissioning from private contractors - appear incapable of learning from or acting on previous experience of contractor failures.

Lex Greensill advised government that the Pharmacy Earlier Payment Scheme (PEPS) private financing arrangement would deliver savings of £100m per year - but DHSC cannot provide evidence of any realised benefits. Only 14% of pharmacies participated in the scheme compared to DHSC’s anticipated rates of 60-80%. In July 2020 the Department changed the scheme to provide loans prior to the dispensing of prescriptions, but no evaluation was made of this change.

When Greensill Capital collapsed in March 2021 no other finance provider was willing to take on the scheme, and government had to step in to pay pharmacies. From November 2021, DHSC introduced new arrangements to reimburse pharmacy claims in four business days and this new process does not involve private sector financing.

From 2019 Greensill Capital also marketed the salary advance scheme to NHS trusts – but Government advice to avoid these sorts of schemes was never passed on to NHS trusts and a number them subscribed to the ‘free’ scheme, with the taxpayer now left to pick up the costs again following Greensill Capital’s collapse.

Chair's comments

Dame Meg Hillier MP, Chair of the Public Accounts Committee, said:

“The utter failure of controls at DHSC - at best terribly naïve and at worst negligent – in dealing with Greensill Capital far predate the pandemic.

“The promises made by Greensill and the easy acceptance of these by the Department of Health and Social Care are reminiscent of the Emperor’s new clothes. That DHSC is now paying pharmacies more quickly itself begs the question why it ever engaged with ‘supply chain finance’ in the first place.”

Further information

Image: flickr